Opinion | Armenia’s U-turn back to ‘multi-vector foreign policy’

The Com­pre­hen­sive Economic Part­ner­ship Agreement (CEPA) signed by sides at the Eastern Part­ner­ship summit on 24 November 2017

The first U-turn

Stepan Grigoryan, is head of the Ana­lyt­i­cal Centre for Glob­al­i­sa­tion and Regional Coop­er­a­tion, Armenia.

The statement from the President of Armenian in September 2013 sounded like a bolt from the blue. He would not sign the Asso­ci­a­tion Agreement with the European Union at the planned November Eastern Part­ner­ship Summit in Vilnius, he said. Instead, Armenia would be joining the Russian led Eurasian Economic Union (EAEU). This signified Armenia's departure from a multi-vector foreign policy.

At that point, Armenia had been in talks with the EU for four years. Such a sharp change in the official position of Yerevan created the impres­sion that Russia was certainly involved. Moscow is unhappy about the rap­proche­ment of post-Soviet countries with Europe.

The Armenian author­i­ties justified their decision using economic arguments: the market in the post-Soviet space, and by extension of the EAEU, is well known to Armenians. Therefore, it’s in this market that Armenian goods are com­pet­i­tive. They also claimed that joining the Eurasian Economic Union would lead to an influx of Russian invest­ments into Armenia.

The gov­ern­ment also talked about security, which was an odd thing to hear, as the EAEU encom­pass­es just economic and trade coop­er­a­tion in the post-Soviet space, and is in no way connected to security and defence. In addition, Armenia already has extensive defence coop­er­a­tion with Russia. It was already a member of the Col­lec­tive Security Treaty Orga­ni­za­tion (CSTO), which includes Russia, Kaza­khstan, Belarus, Kyr­gyzs­tan, and Tajik­istan, and hosts a Russian military base on its territory. Armenia's accession to the EAEU did nothing to prevent a four-day war around Karabakh in April 2016.

A second U-turn

By October 2015, relations between the EU and Armenia had already expe­ri­enced a new thaw: the European Com­mis­sion gave consent to restart talks with Armenia to prepare a new agreement. This time the nego­ti­a­tions were suc­cess­ful.

Some worried that the Armenian gov­ern­ment would not risk signing the new agreement. They under­stood that Russia would be against any agreement between Armenia and the EU. The Kremlin was not keen on losing its geopo­lit­i­cal weight in the region and its priv­i­leged position in the Armenian economy.

But the new agreement, the Com­pre­hen­sive Economic Part­ner­ship Agreement (CEPA), was signed by both sides at the Eastern Part­ner­ship summit on 24 November 2017. The main reason Armenian author­i­ties made this second U-turn was that they had encoun­tered serious problems because of their one-sided geopo­lit­i­cal position.

The economic crisis

After Armenia’s accession into the Eurasian Economic Union, exports of Armenian products to Russia did not increase. In fact, they sig­nif­i­cant­ly decreased. After three years in the union, invest­ments had dropped by around 60%. Moreover, in an attempt to protect their own producers and labour force, Russia has closed itself off to Armenian products and workers in many areas of the economy. For example, Russia has increased excise duties on alcohol, and revoked the validity of Armenian driver's licenses on Russian roads.

Armenia has also encoun­tered new problems in its trade with Georgia and Iran, the countries with which they have open land borders, because of switching to EAEU standards. Borders with Azer­bai­jan and Turkey are closed because of the situation in Nagorno-Karabakh.

Now Armenia is hoping that signing CEPA will ensure financial support for projects in the country, and that it will create a better invest­ment climate.

The previous skew towards Russia also led to the strength­en­ing of monop­o­lies within the country. The transfer to Gazprom of the monopoly on gas supplies and dis­tri­b­u­tion in Armenia has created a situation in which Armenians have to pay twice as much for gas as Ukraini­ans. Prices on Armenian airlines are very high due to their depen­dence exclu­sive­ly on Russian airlines.

Against this back­ground, the agreement with the EU provides chances to create alter­na­tives in the energy, aviation, and tourism sectors. In addition, the agreement includes pro­vi­sions to combat cor­rup­tion and monop­o­lies, and to support small and medium-sized busi­ness­es. This means that a return to a multi-vector policy will directly affect the wellbeing of Armenian citizens.

Foreign policy

Coop­er­at­ing exclu­sive­ly with Russia isolates Armenia from the rest of the world. So, Armenia found itself in a marginal minority with Russia during a vote in the Council of Europe on the Crimean situation in 2014. All 43 other members of the Council supported Ukraine.

Diplo­mat­ic benefits of Armenia from mem­ber­ship in organ­i­sa­tions dominated by Russia are also ambiguous. Mem­ber­ship in the CSTO and joining the EAEU did not rally par­tic­i­pants of these organ­i­sa­tions around Armenia on the Karabakh issue. During the four-day war in Nagorno-Karabakh, the CSTO did not make a single statement on the situation, and some members took an alto­geth­er anti-Armenian stance.

It is no secret that Russia manip­u­lates the Karabakh question, and is offering Azer­bai­jan help in exchange for joining the EAEU. The ‘Lavrov plan’ envisions Armenia giving up certain ter­ri­to­ries in Nagorno-Karabakh to Azer­bai­jan.

It’s therefore evident that the presence of many inter­na­tion­al actors in the South Caucasus is in the interests of Armenia. The presence of such players as the EU and the US will help prevent a complete Russian monopoly on power in the region.

Although, on an official level the Kremlin says that Armenia has a sovereign right to build its own relations with the EU, its response is quite expected in light of sanctions and economic dif­fi­cul­ties that prevent Russia from helping Armenia eco­nom­i­cal­ly.

This does not mean Russia is not unhappy. Moscow’s irri­ta­tion is reflected in the infor­ma­tion climate on Russian tele­vi­sion. On the evening of 24 November, after the signing of CEPA, this event became one of the key talking points on the programme ‘Time will Tell’ on Russia’s main channel — the First Channel — where Armenians were called traitors. Another programme, on ‘Meeting Point’ on NTV, compared Armenia on 29 November to a ‘phi­lan­der­ing wife of Russia’.

Bridge between East and West

A multi-vector policy will allow Armenia to make the most of its geo­graph­ic potential. Coop­er­a­tion with the West could turn Armenia into a bridge between the EU and Russia, since it’s the first country of the Eurasian Economic Union to sign an agreement with the EU. In a sense, Armenia might become an example of coop­er­a­tion in the two competing systems.

If Armenia acts promptly, the country could provide transit for cargo going from East to West and vice versa. The Chinese grand project titled the ‘New Silk Road’ might pass through Iran and Armenia, which could become a real platform for regional coop­er­a­tion.

In the region, Armenia could also serve as a bridge of coop­er­a­tion between the EU and Iran in a number of important spheres including energy, atomic energy, transport, banking, gov­er­nance, and shipping. Armenia already has expe­ri­ence working with Iranian author­i­ties and companies. In its turn, Iran is also inter­est­ed in dealing with the EU through Armenia, since it has dif­fi­cul­ties in its relations with countries in Europe.

Thus, the tran­si­tion back to a multi-vector policy will help diversify Armenia’s foreign policy and economic ties and correct the con­se­quences of its one-sided coop­er­a­tion with Moscow.

The opinions expressed in this article are the words of the author alone, and may not reflect the views of OC Media’s editorial board.